Globant S.A. · Globant S.A. is a company organized in the Grand Duchy of Luxembourg, primarily engaged in the designing and engineering of software development through its subsidiaries

1

Globant S.A.

Consolidated Financial Statements as of December 31, 2015 and 2014 and for each of the three years in the period ended December 31, 2015

GLOBANT S.A.

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE

INCOME FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013 (in thousands of U.S. dollars, except per share amounts)

3

Notes 2015 2014 2013

Revenues (1) 253,796 199,605 158,324

Cost of revenues (2) (4) 5.1 (160,292) (121,693) (99,603)

Gross profit 93,504 77,912 58,721

Selling, general and administrative expenses (3) (4) 5.2 (71,594) (57,288) (54,841)

Impairment of tax credits, net of recoveries 3.7.1.1 1,820 1,505 (9,579)

Profit (Loss) from operations 23,730 22,129 (5,699)

Gain on transactions with bonds 3.18 19,102 12,629 29,577

Finance income 6 27,555 10,269 4,435

Finance expense 6 (20,952) (11,213) (10,040)

Finance income (expense), net 6,603 (944) (5,605)

Other income and expenses, net (5) 605 380 1,505

Profit before income tax 50,040 34,194 19,778

Income tax (6) 7.1 (18,420) (8,931) (6,009)

Net income for the year 31,620 25,263 13,769

Other comprehensive loss

Items that may be reclassified subsequently to profit and loss:

- Exchange differences on translating foreign operations (1,353) (433) (269)

- Net fair value gain on available-for-sale financial assets 52 - -

Total comprehensive income for the year 30,319 24,830 13,500

Net income attributable to:

Owners of the Company 31,653 25,201 13,900

Non-controlling interest (33) 62 (131)


Total comprehensive income for the year attributable to:

Owners of the Company 30,352 24,768 13,631

Non-controlling interest (33) 62 (131)

Total comprehensive income for the year 30,319 24,830 13,500

For the year ended December 31,

GLOBANT S.A.

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE

INCOME FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013 (in thousands of U.S. dollars, except per share amounts)

4

Notes 2015 2014 2013

Earnings per share (7)

Basic 8 0.93 0.81 0.50

Diluted 8 0.90 0.79 0.48

Weighted average of outstanding shares (in thousands)

Basic 8 33,960 30,926 27,891

Diluted 8 35,013 31,867 28,884


(1)

Includes transactions with related parties for 6,655, 7,681 and 8,532 as of December 31, 2015, 2014 and 2013, respectively. See note 21.1.

(2) Includes depreciation and amortization expense of 4,441, 3,813 and 3,215 for 2015, 2014 and 2013, respectively.

See note 5. (3)

Includes depreciation and amortization expense of 4,860, 4,221 and 3,941 for 2015, 2014 and 2013, respectively. See note 5.

(4) Includes share-based compensation expense of 735, 35 and 190 under cost of revenues; and 1,647, 582 and 603

under selling, general and administrative expenses for 2015, 2014 and 2013, respectively. See note 5. (5)

In 2015 includes a gain of 625 related to valuation at fair value of the 22.75% of share interest held in Dynaflows as explained in note 23. In 2014 includes the gain of 472 related to the bargain business combination of Bluestar Energy S.A.C., explained in note 23. In 2013 includes the gain of 1,703 on remeasurement of the contingent consideration explained in note 27.10.1.

(6) In 2013, includes deferred income tax gain arising from the recognition of the allowance of 1,317 for impairment of

tax credit. See note 7. (7)

The Company has given retroactive effect to the reverse share split in each of the years presented as explained in note 29.4.

The accompanying notes 1 to 32 are an integral part of these consolidated financial statements

GLOBANT S.A.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2015

AND 2014 (in thousands of U.S. dollars, except per share amounts)

5

2015 2014

ASSETS

Current assets

Cash and cash equivalents 36,720 34,195

Investments 9.1 25,660 27,984

Trade receivables (1) 10 45,952 40,056

Other receivables 11 18,570 14,253

Other financial assets 23 900 -

Total current assets 127,802 116,488

Non-current assets

Other receivables 11 20,122 916

Deferred tax assets 7.2 7,983 4,881

Investment in associates 9.2 300 750

Other financial assets 23 1,221 -

Property and equipment 12 25,720 19,213

Intangible assets 13 7,209 6,105

Goodwill 14 32,532 12,772

Total non-current assets 95,087 44,637

TOTAL ASSETS 222,889 161,125

LIABILITIES

Current liabilities

Trade payables 15 4,436 5,673

Payroll and social security taxes payable 16 25,551 20,967

Borrowings 17 280 513

Other financial liabilities 23 6,240 1,045

Tax liabilities 18 10,225 3,446

Other liabilities 9 173

Total current liabilities 46,741 31,817

Non-current liabilities

Borrowings 17 268 772

Other financial liabilities 23 15,045 263

Provisions for contingencies 19 650 794

Total non-current liabilities 15,963 1,829

TOTAL LIABILITIES 62,704 33,646

Capital and reserves

Issued capital 41,050 40,324

Additional paid-in capital 51,854 50,276

Other reserves (2,012) (711)

Retained earnings 69,243 37,590

Total equity attributable to owners of the Company 160,135 127,479

Non-controlling interests 50 -

Total equity 160,185 127,479

TOTAL EQUITY AND LIABILITIES 222,889 161,125

NotesAs of December 31,

(1)

Includes balances due from related parties of 1,593 and 899 as of December 31, 2015 and 2014, respectively. See note 21.1.


GLOBANT S.A.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013 (in thousands of U.S. dollars except number of shares issued)

6

Balance at January 1, 2013 27,290,748 32,749 11,709 (1,511) (9) - 42,938 - 42,938

Contributions by owners (see note 29.1) 527,638 633 5,815 - - - 6,448 - 6,448

Issuance of shares under share-based compensation plan (see note 29.1) 1,516,724 1,820 790 - - - 2,610 - 2,610

Repurchase of shares (see note 29.2) (339,952) (408) (3,747) - - - (4,155) - (4,155)

Repurchase of options (see note 29.3) - - (1,971) - - - (1,971) - (1,971)

Share-based compensation plan (see note 22) - - 793 - - - 793 - 793

Other comprehensive income for the period, net of tax - - - - (269) - (269) - (269)

Non-controlling interest arising on acquisition (see note 23) - - - - - - - 623 623

Call and put option over non-controlling interest (see note 23) - - (921) - - - (921) - (921)

Net income for the year - - - 13,900 - - 13,900 (131) 13,769

Balance at December 31, 2013 28,995,158 34,794 12,468 12,389 (278) - 59,373 492 59,865

Issuance of shares in connection with the initial public offering (see note 29.1) 4,350,000 5,220 32,513 - - - 37,733 - 37,733

Issuance of shares under share-based compensation plan (see note 29.1) 258,742 310 780 - - - 1,090 - 1,090

Share-based compensation plan (see note 22) - - 3,541 - - - 3,541 - 3,541

Other comprehensive income for the period, net of tax - - - - (433) - (433) - (433)

Acquisition of non-controlling interest (see note 23) - - (96) - - - (96) (554) (650)

Recall of call and put option over non-controlling interest (see note 23) - - 1,070 - - - 1,070 - 1,070

Net income for the year - - - 25,201 - - 25,201 62 25,263

Balance at December 31, 2014 33,603,900 40,324 50,276 37,590 (711) - 127,479 - 127,479

Non-

controlling

interests

Total

Attributable

to owners of

the Parent

Retained

earnings

(losses)

Foreign

currency

translation

Additional

paid-in

capital

Investment

revaluation

reserve

Number of

Shares

Issued (1)

Issued

capital

GLOBANT S.A.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013 (in thousands of U.S. dollars except number of shares issued)

7

Balance at December 31, 2014 33,603,900 40,324 50,276 37,590 (711) - 127,479 - 127,479

Issuance of shares under share-based compensation plan (see note 29.1) 560,649 673 1,878 - - - 2,551 - 2,551

Issuance of shares under subscription agreement (see note 23) 43,857 53 847 - - - 900 900

Share-based compensation plan (see note 22) - - 5,903 - - - 5,903 - 5,903

Other comprehensive income for the period, net of tax - - - - (1,353) 52 (1,301) - (1,301)

Acquisition of non-controlling interest (see note 23) - - - - - - - 83 83

Call and put option over non-controlling interest (see note 23) - - (7,050) - - - (7,050) - (7,050)

Net income for the year - - - 31,653 - - 31,653 (33) 31,620

Balance at December 31, 2015 34,208,406 41,050 51,854 69,243 (2,064) 52 160,135 50 160,185

Attributable

to owners of

the Parent

Non-

controlling

interests

Total

Investment

revaluation

reserve

Number of

Shares

Issued (1)

Issued

capital

Additional

paid-in

capital

Retained

earnings

(losses)

Foreign

currency

translation

reserve

(1)

Includes the effect of the retroactive application of 1-for-12 reverse share split. See note 29.4.

The accompanying notes 1 to 32 are an integral part of these consolidated financial statements.

GLOBANT S.A.

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015,

2014 AND 2013

(in thousands of U.S. dollars)

8

2015 2014 2013

Cash flows from operating activities


Adjustments to reconcile net income for the year to net cash flows

from operating activities:

Share-based compensation expense 2,382 617 793

Current income tax 19,522 8,561 6,538

Deferred income tax (1,102) 370 (529)

Depreciation of property and equipment 5,872 4,902 4,967

Amortization of intangible assets 3,429 3,132 2,189

Allowance for doubtful accounts 205 130 922

Allowance for claims and lawsuits 237 529 18

Gain on remeasument of contingent consideration (note 27.10.1) - - (1,703)

Gain from business combination (note 23) (625) (472) -

Accrued interest 880 378 700

Allowance for impairment of tax credits, net of recoveries (note

3.7.1.1) (1,820) (1,505) 9,579

Gain on transactions with bonds (19,102) (12,629) (29,577)

Net gain arising on financial assets classified as held-for-trading (13,453) (3,813) (850)

Net gain arising on financial assets classified as held-to-maturity (4,941) - -

Exchange differences 10,136 2,148 2,093

Changes in working capital:

Net increase in trade receivables (6,525) (6,336) (5,971)

Net increase in other receivables (32,121) (5,679) (2,987)

Net increase in trade payables 1,386 2,905 1,451

Net increase in payroll and social security taxes payable 6,850 4,231 3,424

Net increase in tax liabilities 2,752 2,375 193

Utilization of provision of contingencies (91) - (40)

Net (decrease) increase in other liabilities (237) 148 (827)

Cash provided by operating activities 5,254 25,255 4,152

Income tax paid (10,569) (10,959) (2,941)

Net cash (used in) provided by operating activities (5,315) 14,296 1,211

Cash flows from investing activities

Acquisition of property and equipment (2) (13,595) (11,391) (5,047)

Proceeds from disposals of property and equipment 88 - 59

Acquisition of intangible assets (3) (4,222) (2,481) (2,335)

Proceeds (payments) related to forward contracts 7,152 (1,069) -

Acquisition of held-for-trading investments (122,087) (87,602) (30,153)

Proceeds from held-for-trading investments 128,822 72,782 21,082

Acquisition of held-to-maturity investments (96,601) - -

Proceeds from held-to-maturity investments 98,156 - -

Payments to acquire other financial assets - - (182)

Payments to acquire investments in associates - (568) -

Acquisition of bonds (46,788) (30,648) (57,634)

Proceeds from sale of bonds 65,890 43,277 87,211

Acquisition of business, net of cash (note 23) (1) (10,569) 218 (2,210)

Seller financing (715) (6,199) (3,022)

Net cash provided by (used in) investing activities 5,531 (23,681) 7,769


GLOBANT S.A.

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015,

2014 AND 2013

(in thousands of U.S. dollars)

9

2015 2014 2013

Cash flows from financing activities

Proceeds from issuance of shares in connection with the initial

public offering (4) - 40,455 -

Capital contributions by owners - - 6,448

Proceeds from the issuance of shares under the share-based

compensation plan 2,236 1,090 2,610

Repurchase of options - - (1,971)

Proceeds from subscription agreement 900 - -

Repayment of borrowings (505) (9,690) (3,783)

Proceeds from borrowings - 34 4,393

Repurchase of shares - - (4,155)

Payment of offering costs - (3,101) (936)

Cash provided by financing activities 2,631 28,788 2,606

Interest paid (633) (320) (535)

Net cash provided by financing activities 1,998 28,468 2,071

Effect of exchange rate changes on cash and cash equivalents 311 (1,939) (1,685)

Increase in cash and cash equivalents 2,525 17,144 9,366

Cash and cash equivalents at beginning of the year 34,195 17,051 7,685

Cash and cash equivalents at end of the year 36,720 34,195 17,051


Supplemental information (1) Cash paid for assets acquired and liabilities assumed in the acquisition of subsidiaries (note 23):

Supplemental information

Cash paid 10,726 1,357 3,436

Less: cash and cash equivalents acquired (157) (1,575) (1,226)

Total consideration paid net of cash and cash equivalents acquired 10,569 (218) 2,210

(2) In 2015, 2014 and 2013, there were 26, 1,207 and 3,533 of acquisition of property and equipment financed with trade payables, respectively. In 2014 and 2013, there were 223 and 185 of acquisition of property and equipment financed with borrowings. In 2015, 2014 and 2013, the Company paid 1,207, 3,533 and 104 related to property, plant and equipment acquired in 2014, 2013 and 2012, respectively.

(3) In 2015 and 2014, there were 439 and 216 of acquisition of intangibles financed with trade payables, respectively. In 2015 and 2013, the Company paid 216 and 294 related to intangibles acquired in 2014 and 2012, respectively.

(4) Proceeds from the Initial Public Offering are disclosed in the statements of changes in Equity net of related expenses which amount 2,722.


GLOBANT S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and 2014 and for the three years in the period ended December 31, 2015

(amounts are expressed in thousands of U.S. dollars, except where expressly indicated that amounts are stated in thousands of other currencies)

10

NOTE 1 – COMPANY OVERVIEW AND BASIS OF PRESENTATION Globant S.A. is a company organized in the Grand Duchy of Luxembourg, primarily engaged in the designing and engineering of software development through its subsidiaries (hereinafter the “Company” or “Globant Lux” or “Globant Group”). The Company specializes in providing services such as application development, testing, infrastructure management, application maintenance and outsourcing, among others. The Company’s principal operating subsidiaries and countries of incorporation as of December 31, 2015 were the following: Sistemas UK Limited in the United Kingdom, Globant LLC and Huddle Group Corp. in the United States of America (the “U.S.”), Sistemas Globales S.A., IAFH Global S.A., Dynaflows S.A. and Huddle Group S.A. in Argentina, Sistemas Colombia S.A.S. in Colombia, Global Systems Outs S.R.L. de C.V. in Mexico, Sistemas Globales Uruguay S.A. in Uruguay, TerraForum Consultoria Ltda. in Brazil, Sistemas Globales Chile Ases. Ltda. in Chile, Globant Peru S.A.C. (formerly “Bluestar Energy S.A.C.”) in Peru and Globant India Private Limited in India (formerly Clarice Technologies Pvt. Ltd.). The Globant Group provides services from development and delivery centers located in the U.S. (San Francisco, New York and Washington), Argentina (Buenos Aires, Tandil, Rosario, Tucuman, Córdoba, Resistencia, Bahia Blanca, Mendoza, Mar del Plata, Santa Fe and La Plata), Uruguay (Montevideo), Colombia (Bogota and Medellin), Brazil (São Paulo), Peru (Lima), Chile (Santiago), Mexico (Mexico City) and India (Pune and Bangalore) and it also has client management centers in the U.S. (San Francisco and Boston) and the United Kingdom (London). The Company also has centers of software engineering talent and educational excellence, primarily across Latin America. Substantially all revenues are generated in the U.S. and United Kingdom, through subsidiaries located in those countries. The Company´s workforce is mainly located in Argentina and to a lesser extent in Uruguay, Mexico and Colombia. The Argentine, Colombian, Mexican and Uruguayan subsidiaries bill the use of such workforce to those U.S. and United Kingdom subsidiaries. The Company’s changed its registered office address since January 30, 2016 from 5 rue Guillaume Kroll, L-1882, Luxembourg to 37A, avenue J.F. Kennedy, L-1855 Luxembourg, Luxembourg NOTE 2 – BASIS OF PREPARATION OF THESE CONSOLIDATED FINANCIAL STATEMENTS

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These consolidated financial statements are presented in thousands of United States dollars (“U.S. dollars”) and have been prepared under the historical cost convention except as disclosed in the accounting policies below.

2.1 – Application of new and revised International Financial Reporting Standards

· Adoption of new and revised standards

The Company has adopted all of the new and revised standards and interpretations issued by the IASB that are relevant to its operations and that are mandatorily effective at December 31, 2015. The application of these amendments has had no impact on the disclosures or amounts recognized in the Company´s consolidated financial statements.



11

· New accounting pronouncements

The Company has not applied the following new and revised IFRSs that have been issued but are not yet mandatorily effective:

IFRS 9 Financial Instruments1

IFRS 15 Revenue from contracts with customer1

IFRS 16 Leases2

Amendments to IAS 38 and IAS 16 Clarification of Acceptable Methods of Depreciation and Amortisation 3

Amendments to IFRS 11 Accounting of Acquisitions of Interests in Join Operations3 Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures4

Amendments to IFRS 5, 7 and Annual improvements 2012 -2014 cycle3 IAS 9 and 34 Amendment to IAS 1 Disclosure initiative3

Amendment to IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses5

Amendment to IAS 7 Financial reporting disclosure5

1 Effective for annual periods beginning on or after January 1, 2018. Early adoption is permitted. 2 Effective for annual periods beginning on or after January 1, 2019. Early adoption is permitted if IFRS 15 has also been applied. 3 Effective for annual periods beginning on or after January 1, 2016. Early adoption is permitted. 4 Effective date deferred indefinitely. 5 Effective for annual periods beginning on or after January 1, 2017. Early adoption is permitted.

· In November 2009, the International Accounting Standards Board (IASB) issued IFRS 9, which introduced new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition, and in November 2013 to include the new requirements for general hedge accounting. On July 24, 2014, the IASB published the final version of IFRS 9 'Financial Instruments'. IFRS 9, as revised in July 2014, introduces a new expected credit loss impairment model. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised. Also limited changes to the classification and measurement requirements for financial assets by introducing a ‘fair value through other comprehensive income’ (FVTOCI) measurement category for certain simple debt instruments. This new standard is effective for periods beginning on or after January 1, 2018.

· On May 28, 2014 the IASB published its new revenue Standard, IFRS 15 “Revenue from Contracts with Customers”. IFRS 15 provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related interpretations when it becomes effective. The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer or promised goods or services to customers in an amount that reflects the consideration to which



12

the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a five-step approach to revenue recognition:

- Step 1: Identify the contract with the customer - Step 2: Identify the performance obligations in the contract - Step 3: Determine the transaction price - Step 4: Allocate the transaction price to the performance obligations in the contracts - Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

Under IFRS 15, an entity recognises revenue when or as performance obligation is satisfied, i.e. when control of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by IFRS 15. The new standard is effective for annual periods beginning on or after January 1, 2018. Early adoption is permitted.

· On January 13, 2016, the IASB issued the IFRS 16 which specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, with the distinction between operating and finance leases removed, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value to be accounted for by simply recognizing an expense, typically straight line, over the lease term. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting

substantially unchanged from its predecessor, IAS 17. IFRS 16 supersedes IAS 17 and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2019, with earlier application being permitted if IFRS 15 has also been applied.

· On May 12, 2014, the IASB issued a set of amendments to IAS 38 (intangible assets) and IAS 16 (property, plant, and equipment). The amendments clarify that: o The use of revenue-based methods to calculate the depreciation of an asset is not appropriate

because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. The amendments to IAS 16 prohibit entities from using a revenue-based depreciation method for items of property, plant and equipment.

o Revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited circumstances.

The amendments are effective prospectively for annual periods beginning on or after January 1, 2016. Early adoption is permitted.

· On May 6, 2014, the IASB issued amendments to the guidance on joint arrangements in IFRS 11. The amendments address how an entity should account for an “acquisition of an interest in a joint operation

that constitutes a business”. The amendments are effective prospectively for annual periods beginning on or after January 1, 2016. Early adoption is permitted.

· On September 11, 2014, the IASB issued amendments to IFRS 10 and IAS 28. These amendments clarify the treatment of the sale or contribution of assets from an investor to its associate or joint venture, as follows: o require full recognition in the investor's financial statements of gains and losses arising on the sale

or contribution of assets that constitute a business (as defined in IFRS 3 Business Combinations);



13

o require the partial recognition of gains and losses where the assets do not constitute a business, i.e. a gain or loss is recognised only to the extent of the unrelated investors’ interests in that associate or joint venture.

These requirements apply regardless of the legal form of the transaction, e.g. whether the sale or contribution of assets occurs by an investor transferring shares in any subsidiary that holds the assets (resulting in loss of control of the subsidiary), or by the direct sale of the assets themselves. On December 17, 2015 the IASB issued an amendment that defers the effective date of the September 2014 amendments to these standards indefinitely until the research project on the equity method has been concluded. Earlier application of the September 2014 amendments continues to be permitted.

· On September 25, 2014, the IASB issued amendments to IFRS 5 and 7 and IAS 19. These amendments include annual improvements, as follows: o adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale

to held for distribution or vice versa and cases in which held-for-distribution accounting is discontinued;

o additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset;

o clarify that the high quality corporate bonds used in estimating the discount rate for post-employment benefits should be denominated in the same currency as the benefits to be paid;

o clarify the meaning of 'elsewhere in the interim report' and require a cross-reference.

· On December 18, 2014, the IASB issued the amendment to IAS 1 to address perceived impediments to preparers exercising their judgement in presenting their financial reports. The amendment is effective for annual periods beginning on or after 1 January 2016, with earlier application being permitted.

· On January 19, 2016, the IASB issued the amendment IAS 12 Income Taxes to clarify the following aspects: o Unrealised losses on debt instruments measured at fair value and measured at cost for tax purposes

give rise to a deductible temporary difference regardless of whether the debt instrument's holder expects to recover the carrying amount of the debt instrument by sale or by use.

o The carrying amount of an asset does not limit the estimation of probable future taxable profits. o Estimates for future taxable profits exclude tax deductions resulting from the reversal of deductible

temporary differences. o An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law

restricts the utilisation of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type.

The amendment is effective for annual periods beginning on or after 1 January 2017, with earlier application being permitted.

· On January 29, 2016, the IASB published amendments to IAS 7 as part of its disclosure initiative (i.e., projects to improve the effectiveness of financial reporting disclosures). The objective of the amendments is to clarify IAS 7 to improve information provided to financial statement users about an entity’s financing activities. The amendments require that an entity disclose, to the extent necessary to

meet the disclosure objective, the following changes in liabilities arising from financing activities: o changes from financing cash flows; o changes arising from obtaining or losing control of subsidiaries or other businesses; o the effect of changes in foreign exchange rates;



14

o changes in fair values; and o other changes.

The IASB defines liabilities arising from financing activities as liabilities “for which cash flows were, or future cash flows will be, classified in the statement of cash flows as cash flows from financing activities.” The amendments indicate that the new disclosure requirements also apply to changes in financial assets that meet this definition. The amendments state that one way to meet the new disclosure requirements is to provide “a reconciliation between the opening and closing balances in the statement of financial position for liabilities arising from financing activities. The amendments are effective for annual periods beginning on or after January 1, 2017. Earlier application is permitted.

The Company is evaluating the impact, if any, of adopting this new accounting guidance on these consolidated financial statements. Although the Company understands that the application of IFRS 9 and 15 in the future may not have a material impact in the amounts reported and disclosures made in the Company’s consolidated

financial statements, it is not practicable to provide a reasonable estimate of the ultimate effect until the Company performs a detailed analysis.

2.2 – Basis of consolidation

These consolidated financial statements include the consolidated financial position, results of operations and cash flows of the Company and its consolidated subsidiaries. Control is achieved where the company has the power over the investee; exposure, or rights, to variable returns from its involvement with the investee and the ability to use its power over the investee to affect the amount of the returns. All intercompany transactions and balances between the Company and its subsidiaries have been eliminated in the consolidation process. Non-controlling interest in the equity of consolidated subsidiaries is identified separately from the Company’s net liabilities therein. Non-controlling interest consists of the amount of that interest at the date of the original business combination and the non-controlling share of changes in equity since the date of the consolidation. Losses applicable to non-controlling shareholders in excess of the non-controlling interest in the subsidiary’s equity are allocated against the interest of the Company, except to the extent that the non-controlling interest has a binding obligation and is able to make an additional investment to cover the losses. These consolidated financial statements have been prepared under the historical cost convention. Acquired companies are accounted for under the acquisition method whereby they are included in the consolidated financial statements from their acquisition date. Detailed below are the subsidiaries of the Company whose financial statement line items have been included in these consolidated financial statements.

Company Country Main Percentage ownership of Activity As of December 31, incorporation 2015 2014 2013

Sistemas UK Limited United Kingdom

Software development and consultancy

100.00% 100.00% 100.00%

Globant LLC United States of America

Software development and consultancy

100.00% 100.00% 100.00%

Sistemas Globales Buenos Aires S.R.L. (1)

Argentina Investing activities - 100.00% 100.00%



15

Company Country Main Percentage ownership of Activity As of December 31, incorporation 2015 2014 2013 4.0 S.R.L. (1) Argentina Investing activities - 100.00% 100.00% Sistemas Colombia S.A.S. Colombia Software development

and consultancy 100.00% 100.00% 100.00%

Global Systems Outsourcing S.R.L. de C.V.

Mexico Outsourcing and consultancy

100.00% 100.00% 100.00%

Software Product Creation S.L.

Spain Investing activities 100.00% 100.00% 100.00%

Globant S.A. Spain Investing activities 100.00% 100.00% 100.00% Sistemas Globales Uruguay S.A.

Uruguay Software development and consultancy

100.00% 100.00% 100.00%

Sistemas Globales S.A. Argentina Software development and consultancy

100.00% 100.00% 100.00%

IAFH Global S.A. Argentina Software development and consultancy

100.00% 100.00% 100.00%

Sistemas Globales Chile Ases. Ltda.

Chile Software development and consultancy

100.00% 100.00% 100.00%

Globers S.A. Argentina Travel organization services

100.00% 100.00% 100.00%

Globant Brasil Participações Ltda. (2)

Brazil Investing activities - 100.00% 100.00%

TerraForum Consultoria Ltda.

Brazil Software development and consultancy

100.00% 100.00% 100.00%

ITO Holdings S.à.r.l. (3) Luxembourg Investing activities - - 100.00% RW Holdings S.à.r.l. (3) Luxembourg Investing activities - - 100.00% Huddle Investment LLP (4) United

Kingdom Investing activities 100.00% 100.00% 86.25%

Huddle Group S.A. (4) Argentina Software development and consultancy

100.00% 100.00% 86.25%

Huddle Group S.A. (4) (5) Chile Software development and consultancy

- 100.00% 86.25%

Huddle Group Corp. (4) United States Software development and consultancy

100.00% 100.00% 86.25%

Globant Peru S.A.C. (6) Peru Software development and consultancy

100.00% 100.00% -

Globant India Privated Limited (7)

India Software development and consultancy

100.00% - -

Dynaflows S.A. (8) Argentina Software development and consultancy

66.73% 22.75% -

(1)

As from January 1, 2015, Sistemas Globales Buenos Aires S.R.L. and 4.0 S.R.L. were merged with Sistemas Globales S.A. and IAFH Global S.A., respectively.

(2) As of December 31, 2015, Globant Brasil Participações Ltda. was merged with TerraForum Consultoria

Ltda. (3)

As of December 31, 2014, these companies were liquidated. (4)

The 86.25% interest in Huddle Investment LLP and its subsidiaries were acquired on October 18, 2013. On October 23, 2014, the remaining 13.75% interest was acquired (see note 23).



16

(5) As of December 31, 2015, Huddle Group S.A. from Chile was merged with Sistemas Globales Chile

Ases. Ltda. (6)

Globant Perú S.A.C. (formerly “Bluestar Energy S.A.C.”) was acquired on October 10, 2014 (see note 23).

(7) Globant India Private Limited (formerly “Clarice Technologies Pvt. Ltd”) was acquired on May 14, 2015

(see note 23). (8)

On October 22, 2015, the Company has increased its participation in Dynaflows S.A. obtaining the control over this company (see note 23).

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 – Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred to the Company, liabilities incurred by the Company to the former owners of the acquiree and the equity interests issued by the Company in exchange for control of the acquiree. Acquisition-related costs are recognized in profit or loss as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value, except that:

· deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively; and

· liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Company entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 Share-based Payment at the acquisition date.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquired business, and the fair value of the acquirer’s previously held equity interest in the acquired business (if any) over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquired business and the fair value of the acquirer’s previously held equity interest in the acquired business (if any), the excess is recognized immediately in profit or loss as a bargain purchase gain. Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognized amounts of the acquired business identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are



17

adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot

exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss. When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree

is remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of. Arrangements that include remuneration of former owners of the acquiree for future services are excluded of the business combinations and will be recognized in expense during the required service period.

3.2 – Goodwill

Goodwill arising in a business combination is carried at cost as established at the acquisition date of the business less accumulated impairment losses, if any. For the purpose of impairment testing, goodwill is allocated to a unique cash generating unit (CGU).

Goodwill is not amortized but is reviewed for impairment at least annually or more frequently when there is an indication that the business may be impaired. If the recoverable amount of the business is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the business and then to the other assets of the business pro-rata on the basis of the carrying amount of each asset in the business. Any impairment loss for goodwill is recognized directly in profit or loss in the consolidated statement of income and other comprehensive income. An impairment loss recognized for goodwill is not reversed in a subsequent period.

The Company has not recognized any impairment loss in the years ended December 31, 2015, 2014 and 2013.

3.3 – Revenue recognition

The Company generates revenue primarily from the provision of software development, testing, infrastructure management, application maintenance, outsourcing services and second screen or similar. Revenue is measured at the fair value of the consideration received or receivable. The Company’s services are performed under both time-and-material (where materials costs consist of travel and out-of-pocket expenses) and fixed-price contracts. For revenues generated under time-and-material contracts, revenues are recognized as services are performed with the corresponding cost of providing those services reflected as cost of revenues when incurred. The majority of such revenues are billed on an hourly, daily or monthly basis whereby actual time is charged directly to the client.



18

The Company recognizes revenues from fixed-price contracts based on the percentage of completion method. Under this method, revenue is recognised in the accounting periods in which services are rendered. In instances where final acceptance of the product, system or solution is specified by the client, revenues are deferred until all acceptance criteria have been met. In absence of a sufficient basis to measure progress towards completion, revenues are recognized upon receipt of final acceptance from the client. The cumulative impact of any revision in estimates is reflected in the financial reporting period in which the change in estimate becomes known. Fixed-price contracts are generally recognized over a period of 12 months or less.

3.4 – Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Finance leases which transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the consolidated statement of profit or loss and other comprehensive income. A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term. During the years ended December 31, 2015 and 2014, the Company has recognized some agreements related to computer leases as finance leases, considering all the factors mentioned above. Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. The Company did not receive any lease incentives in any of the years presented. There are no situations in which the Company qualifies as a lessor.

3.5 – Foreign currencies

Except in the case of TerraForum Consultoria Ltda. (“Terraforum”) and Globers S.A., the Company and the other subsidiaries’ functional currency is the U.S. dollar. In preparing these consolidated financial statements, transactions in currencies other than the U.S. dollar (“foreign currencies”) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognized in profit and loss in the period in which they arise.



19

TerraForum and Globers functional currency is the Brazilian Real and the Argentine Peso, respectively. Assets and liabilities are translated at current exchange rates, while income and expense are translated at the date of the transaction rate. The resulting foreign currency translation adjustment is recorded as a separate component of accumulated other comprehensive income (loss) in the equity.

3.6 – Borrowing costs The Company does not have borrowings attributable to the construction or production of assets. All borrowing costs are recognized in profit and loss under finance loss.

3.7 – Taxation

3.7.1 – Income taxes – current and deferred

Income tax expense represents the sum of income tax currently payable and deferred tax.

3.7.1.1 – Current income tax The current income tax payable is the sum of the income tax determined in each taxable jurisdiction, in accordance with their respective income tax regimes. Taxable profit differs from profit as reported in the consolidated statement of profit or loss and other comprehensive income because taxable profit excludes items of income or expense that are taxable or deductible in future years and it further excludes items that are never taxable or deductible. The Company’s

liability for current income tax is calculated using tax rates that have been enacted or substantively enacted as of the balance sheet dates. The current income tax charge is calculated on the basis of the tax laws in force in the countries in which the consolidated entities operate. Globant S.A (Luxembourg) is subject to a corporate income tax rate of 20%. In 2008, Globant S.A. (Spain) elected to be included in the Spanish special tax regime for entities having substantially all of their operations outside of Spain, known as “Empresas Tenedoras de Valores en el Exterior” (“ETVE”), on which dividends distributed from its foreign subsidiaries as well as any gain resulting from disposal are tax free. In order to be entitled to the tax exemption, among other requirements, Globant Spain’s main activity must be the administration and management of equity instruments from non-Spanish entities and such entities must be subject to a tax regime similar to that applicable in Spain for non-ETVEs companies. During 2014 and 2015, the Company’s Uruguayan and Colombian subsidiaries distributed dividends to Globant S.A. for an amount of 1,000 and 704 for 2014, and 2,351 and 2,160 for 2015, respectively. If this tax exemption would not applied, the applicable tax rate should be 20%. From a taxable income perspective, the Argentine subsidiaries represent the Company’s most significant operations. Argentine companies are subject to a 35% corporate income tax rate. In January 2006, Huddle Group S.A. (“Huddle Argentina”) and, in May 2008, IAFH Global S.A. and Sistemas Globales S.A. were notified by the Argentine Government through the Ministry of Economy and Public Finance that they had been included within the promotional regime for the software industry established under Law No. 25,922 (the “Software Promotion Regime”). The two principal benefits arising from Law No. 25,922 were:



20

a) The reduction of 60% of the income tax calculated for each year. This benefit could be applied for fiscal years ending after the notification to such subsidiaries of their inclusion in the Software Promotion Regime.

b) A tax credit of up to 70% of the social security taxes paid by such subsidiaries, under Argentine Law

Nos. 19,032, 24,013 and 24,241. This credit can be used to cancel Argentine federal taxes originated from the software industry. The principal Argentine federal tax that could be cancelled with this credit was value-added-tax (“VAT”). Income tax was explicitly excluded from this benefit.

In 2011, the Argentine Congress passed Law No. 26,692, which maintains all benefits from Law No. 25,922 and includes additional benefits (subject to the issuance of implementing regulations). The principal characteristics of the Law No. 26,692 are the following:

a) The new law extends fiscal benefits contemplated by the Software Promotion Regime until December 31, 2019, providing certainty regarding these tax credits for the Argentine software industry.

b) The new law maintains the reduced income tax rate (14%, instead of the otherwise applicable income

tax rate of 35%) and the tax credit equivalent of up to 70% of social security taxes, but only with respect to the portion of the business related to the promoted activities.

c) Tax credits arising from the Software Promotion Regime can still be applied against VAT and other Argentine federal taxes. Additionally, the new law allows such tax credit to be applied to cancel income taxes, up to a percentage not greater that the ratio of the taxpayer’s export revenue to its total

sales. On September 16, 2013, the Argentine Government published Regulatory Decree No. 1315/2013, which governs the implementation of the Software Promotional Regime, established by Law No. 25,922, as amended by Law No. 26,692. Regulatory Decree No. 1315/2013, introduced the specific requirements needed to obtain the fiscal benefits contemplated under the Software Promotion Regime, as amended by Law No. 26,692. Those requirements include, among others, minimum annual revenue, minimum percentage of employees involved in the promoted activities, minimum aggregate amount spent in salaries paid to employees involved in the promoted activities, minimum research and development expenses and the filing of evidence of software-related services exports. Regulatory Decree No. 1315/2013 further provides that:

- from September 17, 2014 through December 31, 2019, only those companies that are accepted for registration in the National Registry of Software Producers (Registro Nacional de Productores de Software y Servicios Informaticos) maintained by the Secretary of Industry (Secretaria de Industria del Ministerio de Industria) will be entitled to participate in the benefits of the Software Promotion Regime;

- applications for registration in the National Registry of Software Producers must be made to the Secretary of Industry within 90 days after the publication in the Official Gazette (Boletín Oficial) of the relevant registration form (which period expired on July 8, 2014);

- the 60% reduction in corporate income tax provided under the Software Promotion Regime shall only become effective as of the beginning of the fiscal year after the date on which the applicant is accepted for registration in the National Registry of Software Producers; and



21

- upon the Secretary of Industry’s formal approval of an applicant’s registration in the National Registry of Software Producers, any promotional benefits previously granted to such person under Law No. 25,922 shall be extinguished.

In addition, Regulatory Decree No. 1315/2013 delegates authority to the Secretary of Industry and the Federal Administration of Public Revenue (Administración Federal de Ingresos Publicos, or AFIP) to adopt ‘‘complementary and clarifying’’ regulations in furtherance of the implementation of the Software Promotion

Regime. On March 11, 2014, AFIP issued General Resolution No. 3,597. This resolution provides that, as a further prerequisite to participation in the Software Promotion Regime, a company that exports software and related services must register in a newly established Special Registry of Exporters of Services (Registro Especial de Exportadores de Servicios). On March 14, May 21 and May 28, 2014, the Company´s Argentine subsidiaries, Huddle Group S.A., IAFH Global S.A. and Sistemas Globales S.A., respectively, applied and were accepted for registration in the Special Registry of Exporters of Services. In addition, General Resolution No. 3,597 states that any tax credits generated under Law No. 25,922 by a participant in the Software Promotion Regime was only valid until September 17, 2014. The Company’s Argentine subsidiaries submitted their applications for registration in the National Registry of Software Producers on June 25, 2014. As of December 31, 2013, based on its interpretation of Regulatory Decree No. 1315/2013, and considering the facts and circumstances available until the date of issuance of the consolidated financial statements for the year then ended, management believed that any tax credits generated under Law No. 25,922 would only be valid until the effective date of registration in the National Registry of Software Producers and, consequently, due to the uncertainty regarding the actual date of registration in such registry, that there was a substantial doubt as to the recoverability of the tax credit generated by its Argentine subsidiaries under Law No. 25,922. Accordingly, as of December 31, 2013 the Company recorded a valuation allowance of 9,579 to reduce the carrying value of such tax credit to its estimated net realizable value. On March 26, 2015 and April 17, 2015, the Secretary and Subsecretary of Industry issued rulings approving the registration in the National Registry of Software Producers of Sistemas Globales S.A. and IAFH Global S.A. and Huddle Group S.A., respectively. In each case, the ruling made the effective date of registration retroactive to September 18, 2014 and provided that the benefits enjoyed under the Software Promotion Law as originally enacted were not extinguished until the ruling goes into effect (which have occurred upon its date of publication in the Argentine government’s official gazette). On May 7, 2015, the Company applied to the Subsecretary of Industry for deregistration of Huddle Group S.A. from the National Registry of Software Producers, as the subsidiary had discontinued activities since January 1, 2015. As a consequence, Huddle Group S.A. is subject to a 35% corporate income tax rate since January 1, 2015. As of December 31, 2015 and 2014, the Company recorded a gain of 1,820 and 1,505 related to the partial reversal of the allowance of impairment of tax credit generated under the abovementioned regime up to the date of the reaccreditation of the Argentine subsidiary (Sistemas Globales S.A.) by the Secretary of Industry who stated in the respective resolutions that the tax benefits under the previous regime expired on the date of the reaccreditation. After the date of the reaccreditation under the new law, the Company has not recognized any benefit under the law 25,922.



22

The Company’s Uruguayan subsidiary Sistemas Globales Uruguay S.A. is domiciled in a tax free zone and has an indefinite tax relief of 100% of the income tax rate and an exemption from VAT. Aggregate income tax relief arising under Sistemas Globales Uruguay S.A. for years ended December 31, 2015, 2014 and 2013 were 1,175, 469 and 284, respectively. The Company’s Colombian subsidiary Sistemas Colombia S.A.S. is subject to federal corporate income tax at the rate of 25% and the CREE (“Contribución Empresarial para la Equidad”) at the rate of 9% calculated on net income before income tax, applicable till December 31, 2015. After that date, the rate will be increased to 14%. The Company’s U.S. subsidiaries Globant LLC and Huddle Group Corp are subject to U.S. federal income tax at the rate of 34%. The Company’s English subsidiaries Sistemas UK Limited and Huddle Investment LLP, are subject to corporate income tax at the rate of 21%. The Company’s Chilean subsidiary Sistemas Globales Chile Ases. Ltda. is subject to corporate income tax at the rate of 22.5%. For the year 2016, the corporate income tax rate will be 24%.

The Company’s Brazilian subsidiary Terraforum Consultoría Ltda., applies the taxable income method called “Lucro real”. Under this method, taxable income is based upon a percentage of profit accrued by the Company, adjusted according to the add-backs and exclusions provided in the relevant tax law. The rate applicable to the taxable income derived from the subsidiary’s activity is 24% plus 10% if the net income before income tax is higher than 120,000 reais.

The Company’s Peruvian subsidiary, Globant Peru S.A.C. is subject to corporate income tax at the rate of

30%.

The Company’s Mexican subsidiary, Global Systems Outsourcing S.R.L. de C.V., is subject to corporate income tax at the rate of 30%.

The Company’s Indian subsidiary Globant India Private Limited is primarily export-oriented and is eligible for certain income tax holiday benefits granted by the government of India for export activities conducted within Special Economic Zones, or SEZs. Indian profits ineligible for SEZ benefits are subject to corporate income tax at the rate of 34.61%. In addition, all Indian profits, including those generated within SEZs, are subject to the Minimum Alternative Tax (MAT), at the current rate of approximately 21.34%, including surcharges. 3.7.1.2 – Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets including tax loss carry forwards are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.



23

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the entities are able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. The Company has not recorded any current or deferred income tax in other comprehensive income or equity in any each of the years presented. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination. Under IFRS, deferred income tax assets (liabilities) are classified as non-current assets (liabilities).

The Company does not have unrecognized tax benefits or reserve for uncertain tax positions that require disclosure in its consolidated financial statements. 3.8 – Property and equipment

Fixed assets are valued at acquisition cost, net of the related accumulated depreciation and accumulated impairment losses, if any. Depreciation is recognized so as to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Lands and properties under construction are carried at cost, less any recognized impairment loss. Properties under construction are classified to the appropriate categories of property and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Land is not depreciated.



24

An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. The value of fixed assets, taken as a whole, does not exceed their recoverable value.

3.9 – Intangible assets Intangible assets include licenses, trademarks, customer relationships and non-compete agreements. The accounting policies for the recognition and measurement of these intangible assets are described below.

3.9.1 – Intangible assets acquired separately Intangible assets with finite useful life that are acquired separately (licenses) are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over the intangible assets estimated useful lives. The estimated useful lives and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimates being accounted for on a prospective basis. 3.9.2 – Intangible assets acquired in a business combination Intangible assets acquired in a business combination (trademarks, customer relationships and non-compete agreement) are recognized separately from goodwill and are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets acquired separately.

3.9.3 – Internally-generated intangible assets Intangible assets arising from development are recognized if, and only if, all the following have been demonstrated: - the technical feasibility of completing the intangible asset so that it will be available for use or sale; - the intention to complete the intangible asset and use or sell it; - the ability to use or sell the intangible asset; - how the intangible asset will generate probable future economic benefits; - the ability of adequate technical, financial and other resources to complete the development and to use or

sell the intangible asset, and - the ability to measure reliably the expenditure attributable to the intangible asset during its development. The amount initially recognized for internally-generated assets is the sum of expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in profit or loss in the period in which it is incurred. Subsequent to initial recognition, intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.



25

3.9.4 – Derecognition of intangible assets

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, and are recognized in profit or loss when the asset is derecognized.

3.10 – Impairment of tangible and intangible assets excluding goodwill

At each balance sheet date, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit or the business, as the case may be. The recoverable amount of an asset is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognized immediately in the statement of profit or loss and other comprehensive income for the year. As of December 31, 2015, 2014 and 2013, no impairment losses were recorded.

3.11 – Provisions for contingencies The Company has existing or potential claims, lawsuits and other proceedings. Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation, and the advice of the Company’s legal advisors. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The amount of the recognized receivable does not exceed the amount of the provision recorded.

3.12 – Financial assets

Financial assets are classified into the following specified categories: “held-to-maturity” investments, “available-for-sale” (“AFS”) financial assets, “fair value through profit or loss” (“FVTPL”) and “loans and receivables”. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.



26

3.12.1 – Effective interest method

The effective interest method is a method of calculating the amortized cost of an instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the instrument, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

3.12.2 – Financial assets at FVTPL

Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL. A financial asset is classified as held for trading if:

- It has been acquired principally for the purpose of selling it in the near term; or - On initial recognition it is part of a portfolio of identified financial instruments that the Company

manages together and has a recent actual pattern of short-term profit-taking; or - It is a derivative that is not designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:

- Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

- The financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

- It forms part of a contract containing one or more embedded derivatives, and IAS 39 permits the entire combined contract to be designated as at FVTPL.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ‘Finance income’ line.

3.12.3 – Available-for-sale financial assets (AFS financial assets)

AFS financial assets are non-derivatives that are either designated as AFS or are not classified as (a) loans and receivables, (b) held-to-maturity investments or (c) FVTPL. Listed redeemable notes held by the Company that are traded in an active market are classified as AFS and are stated at fair value at the end of each reporting period. Fair value is determined in the manner described in note 27.8. Changes in the carrying amount of AFS financial assets relating to changes in foreign currency rates, interest income calculated using the effective interest method are recognized in profit or loss. Other changes in the carrying amount of AFS financial assets are recognized in other comprehensive income and accumulated under the heading of investment revaluation reserve. The AFS financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate prevailing at the end of the reporting period. The foreign exchange gains and losses that are recognized in profit or loss are determined based on the amortized cost of the monetary asset. Other foreign exchange gains and losses are recognized in other comprehensive income.



27

3.12.4 - Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Group has the positive intent and ability to hold to maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method less any impairment. During December, 2015, the Company has reclassified

Documents

Globant S.A. · Globant S.A. is a company organized in the Grand Duchy of Luxembourg, primarily engaged in the designing and engineering of software development through its subsidiaries